My house is underwater and I am thinking about walking away from it. What do you think? Home underwater, Florida
During the housing crash of 2008, when callers called into SuzeOrman.com financial show, I heard her tell many callers if your home is underwater, then walk away from it.
But today’s options might be different, but only you can make the decision to walk away. There are many reasons why people continue paying their mortgages even though it may take years—or even decades—to get back to the point where the home is worth more than what’s owed.
Whether it’s a sense of obligation to live up to the contract they signed when they purchased the home, a strong attachment to the place where they have lived and perhaps raised a family, worry about damage to their credit rating by not paying, or just plain resignation, many homeowners are going to just keep on writing out that check each month and hope for the best.
The benefit of this approach is that you don’t have to be concerned about others finding out about your financial difficulties or you don’t have to find a new place to live. But there are some important questions to ask yourself, with the main one being whether you are just postponing the inevitable.
You may be keeping the wolf from the door, but he may be lurking not far away. And financially, you may pay significantly more to keep your home than if you rent, and perhaps later buy a less expensive home.
A home is just housing – a roof over your head, however, many homeowners, have instilled unrealistic emotional value in their homes. The home is now on the same level as the flag and motherhood.
HUD.gov-approved housing counseling agencies are available to provide you with the information and assistance you need to avoid foreclosure. As part of President Obama's comprehensive Homeowner Affordability and Stability Plan (HASP), you may be eligible for a special Making Home Affordable loan modification or refinance, to reduce your monthly payments and help you keep your home.
If you need help understanding the Making Home Affordable programs, you can use this search tool to find a counseling agency in your area that will provide you with free foreclosure prevention services. If you are eligible for the loan modification or refinance program, the counselor will work with you to compile an intake package for your servicer.